NEW DELHI: Govt on Wednesday increased the wage ceiling for mandatory Employees’ Provident Fund Organisation contribution from Rs 15,000 a month to Rs 25,000 – a move that will bring around one crore additional workers into the social security net and also result in higher pension payouts for existing Employees’ Pension Scheme (EPS) subscribers, reports Shiva Rajora.Earlier, EPFO membership was mandatory only for employees earning up to Rs 15,000 a month, now raised to Rs 25,000. The wage ceiling was last revised in Sept 2014, when govt more than doubled it from Rs 6,500. The increasewas necessitated due to an increase in minimum wages.Govt’s decision to increase wage ceiling for mandatory EPFO contribution will be implemented on Thursday, which happens to be Vishwakarma Puja. It will mean that EPFOregistered entities with 20 or more workers will now have to ensure they contribute 12% of the monthly salary towards PF and pension, with a matching contribution by the employee. On average, the increase in PF for someone earning up to Rs 20,000 will be to the tune of Rs 600 a month, labour ministry officials said.“The decision will result in increased savings for employees, and they will continue to earn higher interest on their savings,” Mandaviya told reporters. Dismissing concerns around employers restructuring the existing cost-to-company (CTC) to absorb the increased PF and pension liability, Mandaviya reiterated statutory PF contributions from the employers’ side are not allowed to be deducted from the employees’ pay. “We take note of the concerns and will issue detailed guidelines on the matter,” he said.“Raising threshold narrows the cost arbitrage that unorganised players exploit, rewarding compliant employers and accelerating the formalisation process,” said Indian Staffing Federation executive director Suchita Dutta. Official data shows that EPFO has nearly 8 crore contributing members across 7.7 lakh active establishments, while EPS provides pension benefits to around 82 lakh pensioners. The total corpus managed by the retirement fund body stands close to Rs 30 lakh crore.
